v3.24.3
Derivative Instruments and Hedging Activities
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
This footnote should be read in conjunction with the complete description under Item 15 — Note 7, Accounting for Derivative Instruments and Hedging Activities, to the consolidated financial statements included in the Company’s 2023 Form 10-K.
Interest Rate Swaps
The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest payments. As of September 30, 2024, the Company had interest rate derivative instruments on non-recourse debt extending through 2040, a portion of which were designated as cash flow hedges. Under the interest rate swap agreements, the Company pays a fixed rate and the counterparties to the agreements pay a variable interest rate.
Energy-Related Commodity Contracts
As of September 30, 2024, the Company had energy-related derivative instruments extending through 2033. At September 30, 2024, these contracts were not designated as cash flow or fair value hedges.
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of the Company’s open derivative transactions broken out by commodity:
Total Volume
September 30, 2024December 31, 2023
CommodityUnits(In millions)
PowerMWh(18)(23)
Natural Gas MMBtu13 17 
InterestDollars$1,711 $2,467 
Fair Value of Derivative Instruments
The following table summarizes the fair value within the derivative instrument valuation on the consolidated balance sheets:
 Fair Value
 Derivative AssetsDerivative Liabilities
September 30, 2024December 31, 2023September 30, 2024December 31, 2023
(In millions)
Derivatives Designated as Cash Flow Hedges:    
Interest rate contracts current$4 $7 $— $— 
Interest rate contracts long-term10 12 2 2 
Total Derivatives Designated as Cash Flow Hedges$14 $19 $2 $2 
Derivatives Not Designated as Cash Flow Hedges: 
Interest rate contracts current$23 $33 $— $— 
Interest rate contracts long-term60 69 1 — 
Energy-related commodity contracts current7 1 51 51 
Energy-related commodity contracts long-term— 1 276 279 
Total Derivatives Not Designated as Cash Flow Hedges$90 $104 $328 $330 
Total Derivatives$104 $123 $330 $332 
The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty level. As of September 30, 2024 and December 31, 2023, the amount of outstanding collateral paid or received was immaterial. The following tables summarize the offsetting of derivatives by counterparty:
Gross Amounts Not Offset in the Statement of Financial Position
As of September 30, 2024Gross Amounts of Recognized Assets/LiabilitiesDerivative InstrumentsNet Amount
Energy-related commodity contracts(In millions)
Derivative assets$7 $— $7 
Derivative liabilities(327)— (327)
Total energy-related commodity contracts$(320)$— $(320)
Interest rate contracts
Derivative assets$97 $(2)$95 
Derivative liabilities(3)2 (1)
Total interest rate contracts$94 $— $94 
Total derivative instruments $(226)$— $(226)
Gross Amounts Not Offset in the Statement of Financial Position
As of December 31, 2023Gross Amounts of Recognized Assets/LiabilitiesDerivative InstrumentsNet Amount
Energy-related commodity contracts(In millions)
Derivative assets$2 $— $2 
Derivative liabilities(330)— (330)
Total energy-related commodity contracts$(328)$— $(328)
Interest rate contracts
Derivative assets$121 $(2)$119 
Derivative liabilities(2)2 — 
Total interest rate contracts$119 $— $119 
Total derivative instruments$(209)$— $(209)
Accumulated Other Comprehensive Income
The following table summarizes the effects on the Company’s accumulated OCI balance attributable to interest rate swaps designated as cash flow hedge derivatives, net of tax:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(In millions)
Accumulated OCI beginning balance$18 $24 $18 $24 
Reclassified from accumulated OCI to income due to realization of previously deferred amounts(1)(1)(3)(2)
Mark-to-market of cash flow hedge accounting contracts(12)9 (10)10 
Accumulated OCI ending balance, net of income tax expense of $—, $4, $— and $4, respectively
5 32 5 32 
Accumulated OCI attributable to noncontrolling interests4 21 4 21 
Accumulated OCI attributable to Clearway Energy, Inc.$1 $11 $1 $11 
Gains expected to be realized from OCI during the next 12 months, net of income tax expense of $1
$2 $2 
Amounts reclassified from accumulated OCI into income are recorded to interest expense.
Impact of Derivative Instruments on the Consolidated Statements of Income
Mark-to-market gains/(losses) related to the Company’s derivatives are recorded in the consolidated statements of income as follows:
Three months ended September 30,Nine months ended September 30,
2024202320242023
(In millions)
Interest Rate Contracts (Interest expense)$(57)$33 $(33)$34 
Energy-Related Commodity Contracts (Mark-to-market for economic hedging activities included in Total operating revenues) (a)
72 (22)11 28 
Energy-Related Commodity Contracts (Mark-to-market for economic hedging activities included in Cost of operations) (b)
— 3 (3)3 
(a) Relates to long-term energy related commodity contracts at Elbow Creek, Mesquite Star, Mt. Storm, Langford and Mesquite Sky and short-term heat rate call option energy-related commodity contracts at El Segundo, Marsh Landing and Walnut Creek.
(b) Relates to long-term backbone transportation service energy-related commodity contracts at El Segundo and Walnut Creek.
See Note 5, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.